The front page of the Detroit Free Press was extremely depressing yesterday: record numbers of home foreclosures in the Detroit Metro area, in Macomb County tripling since 2005. Oakland county, one of the richest in the country, saw foreclosures rise from 2,755 in 2005 to 8,192 in 2006. Detroit and Wayne County are just off the chart. Forgetting for a moment what that is doing to home prices for people who are making their payments (for now), and we'll get there in a second - the sheer human misery expressed by the 55,694 foreclosure filings in Detroit and its suburbs in 2006 cannot be explained in dollar figures. You need to think about almost 60,000 households that either can't pay their mortgage, can't pay their taxes, or have lost all of their equity (if they had any) in a depressed market and are just choosing to walk away. However you look at it, it blows (not to put to fine a point on it). I can't imagine where all of those people are going to go. To a new job in Tennessee, to live with their parents, to a shelter? What happens to these people? Over the last several years home ownership reached record highs in the United States - and clearly it was a sham, a nimbus bluster, propped up by interest-only mortgages and ARMs, inflated housing prices and the cruel notion that in America you will never lose money owning a home. Oops.
It brings me to my second thought: people who are hanging in there in lousy markets like Detroit (for the time being) are faring poorly even if they are not about to lose the ranch, because they are paying for depreciating assets. When we purchased our home our community had appreciated 14% the year before, and everyone thought our neighborhood would be the next one to start knocking down cute ranches to build sprawling McMansions and bigfoot abominations*. If Zillow is to be believed (and I have had a somewhat stormy relationship with that site), we've depreciated more than 10% since November, and you don't see my municipality re-assessing our taxes back down. I can write about sushi and pretend everything is super, but this is a very grave concern. We're not moving south (yet) to try for a job at a non-union car plant, but the idea that we might have to stay in a tiny, tiny house for a long, long time because no one can afford to buy it and we can't afford to sell it really weighs on me. At least there's a roof over our heads. To the 56,000, I wish I could take you all in. I wish I could help you refinance and keep your place. I wish you didn't have to explain to your kids about their room, or leaving their friends, or moving away from Grandma. It sucks. We all know it sucks. Good luck to you.
*You'll note this means we were speculating too. C'est la vie.
2 comments:
I read an article just the other day about eveil ARMs. I'm kind of glad that I don't own a house because of that...though, Colorado's market is still very favorable, I think.
Could this be the bubble bursting? Seems to me that it has to be. I, too, feel bad for all of those people who got in over their heads...
ARMs are bad news 99.9% of the time. If you can avoid them, do so at all costs. The risk isn't worth it.
As far as what is happening to people when they are foreclosed upon, I have an interesting story for you. I know a gal through a friend who filed bankruptcy and ended up losing her house in the process (it was VERY bad - you wouldn't believe the debt these people had). Within a year, they had another house BUILT FOR THEM, only to have it foreclosed upon after 8 months of living there. WHAT WERE THESE PEOPLE THINKING???? I don't whether to blame the mortgage company for giving these high riskers the money or the people themselves for thinking they could pull that off.
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